Transactions carried out with intent to defraud creditors are actionable under Section 66 of the Insolvency and Bankruptcy Code, while payments made in the ordinary course of business do not constitute preferential transactions under Section 43.

ORDER

Per: Coram

1. The present Interlocutory Application has been filed by the Applicant seeking following reliefs:

i. Pass an appropriate order under section 66 (1) of the Code with respect to Transaction No. 1 and direct, the Directors (viz. Respondent Nos. 1 to 3) and Respondent No. 4 shall jointly and severally contribute a sum of Rupees 16.49 Crores (Rupees Sixteen Crores, Forty Nine Lakhs) to the assets of the Corporate Debtor.

ii. Pass an appropriate order under section 66 (1) of the Code with respect to Transaction No. 2 and direct, the Directors (viz. Respondent Nos. 1 to 3) and Respondent No. 5 shall jointly and severally contribute a sum of Rs. 29.65 Lakhs (Rupees Twenty-Nine Lakhs, Sixty-Five Thousand) to the assets of the Corporate Debtor.

iii. Pass an appropriate order under section 66, subsection one of the code with respect to transaction number 2 for carrying out the business of the Corporate Debtor with intent to defraud the creditors of the corporate data.

iv. Pass an appropriate order under section 44 of the Code reversing the effect of the preferential transaction and direct Respondent No. 2 to payback Rs. 12 Lakhs to the Applicant / CIRP, that she may have made as a result of such preference.

v. Pass an appropriate order under section 44 of the Code reversing the effect of the preferential transaction and to direct Respondent Nos. 1 to 3 and Respondent No. 6 to payback Rs.1.33 Crores to the Applicant / CIRP, that he has made as a result of such preference.

CP (IB) 3863 OF 2019

vi. Pass such other orders as this Hon’ble Tribunal may think fit and proper, in the facts and circumstances of the present case, and in the interest of justice, equity and good conscience.

2. The present Interlocutory Application is filed on behalf of the Resolution Professional, Mr. Vinodkumar Pukhraj Ambavat of Varsha Corporation Limited under Sections 25(2)(j) read with Sections 43 , 45 and 66 of the Insolvency and Bankruptcy Code, 2016 for seeking appropriate directions, orders and declarations against the Respondent (s) with respect to certain transactions identified as either preferential or fraudulent transactions.

3. The facts leading to the case in hand are as follows:

i. The Corporate Debtor was admitted to the Corporate Insolvency Resolution Process (CIRP) vide an Order dated 10.06.2022 passed by this Tribunal. The Applicant was appointed as the ‘Resolution Professional’ of the Corporate Debtor by the Committee of Creditors ("COC") in their second meeting held on 08.08.2022.

ii. The Applicant has identified, assessed and determined four (4) transactions, entered / executed by the Corporate Debtor which are stated to fall within the mischief of the above provisions under Chapter Ill and VI of the Code, 2016 causing a potential loss of Rs. 18,24,00,000 to the Creditors of the Corporate Debtor from 15/11/2019 to 10/06/2022. For this purpose, the Applicant is stated to have examined and relied upon the Transaction Review / Audit Report as prepared by the Transactional Auditors after approval of the CoC.

iii. The Corporate Debtor was involved in the business of trading in plastic raw materials, chemicals etc. and trading in bullion.

CP (IB) 3863 OF 2019

Further, it is an admitted position that since Financial Year 2018- 19, the revenues of Corporate Debtor have been exclusively from bullion trading.

iv. The Applicant respectfully submits that, the Respondent Nos. 1 to 3 are the promoters / directors of the Corporate Debtor as per the records available of the MCA website, and Respondent Nos. 1 to 3 are partners of Respondent No. 6. Respondent No. 4 and 5 are the parties with whom the Directors of the Corporate Debtor have fraudulently / wrongfully traded with an intent to conceal the monies and defraud the Creditors. Respondent Nos. 3 and 6 are the parties with whom the Directors have entered into preferential transactions.

4. Transaction 1 : Sale of gold bullion to Swastik Diamonds, Respondent No. 4:

i. Out of the total sales revenue of the Co